Eatonfield agrees disposals worth £9.4m
TROUBLED Cheshire developer Eatonfield has struck a deal to sell a significant part of its estate to Leeds-based developer Trilandium.
The Tarporley-based company has been seeking to raise cash from the sale of its property portfolio for some time. It now expects to receive £6.65m over the next three years from the sale of seven residential sites in Wales.
A further £2.75m will come from the disposal of a site at Birkwood near Glasgow.
AIM-listed Eatonfield also expects to secure housebuilding contracts with Trilandium for 243 units in Wales, which could be worth £25m over the next five years, and 76 in Scotland, subject to planning permission. The sale of the Welsh sites has the backing of Eatonfield’s bank but the Scottish deal still needs approval.
The company said it will use the cash to reduce net debt of £26.9m. The total proceeds of £9.4m match the amount of debt secured on the sites.
The Royal Bank of Scotland (RBS), which holds a charge over the Welsh sites, has agreed to extend the repayment date of loans worth £8.8m from December 2010 to March 2014.
In a detailed statement it said RBS had also agreed to provide the group with a £250,000 working capital facility to support the contract housebuilding operation. The board also plans to raise further funds through the issue of new equity, most of which will be used to clear the group’s outstanding debts with trade creditors.
Allied Irish Bank is owed £9.9m secured on a number of land assets including Birkwood, the Corus site at Workington, Cumbria and sites in Driffield, Yorkshire and Pen-Y-Bont, Flintshire.
A further £4.5m is owed to the Co-operative Bank which has a charge over a freehold site at Ystalyfera near Swansea. Eatonfield has been “in active discussions” with a potential buyer of part of the site. The loan was due for repayment in October but Eatonfield said the bank was supportive of its plans.
Money is also owed to Anglo Irish Bank (£3.3m), HSBC (£1.2m) and the Principality Building Society (£335,000). Eatonfield is in breach of the Anglo Irish loan and is trying to sell the property in Sheffield that it is secured against. HSBC’s loan is also secured against properties that are up for sale and the Principality money is being used to develop houses.
“Overall, the board believes that the strategy outlined above represents the only viable means of protecting the interests of all of the group’s stakeholders,” said the company. “These arrangements will, in time, provide an exit route for senior lenders, prospects of long-term value creation for existing and new shareholders alike and, ultimately, a means by which a meaningful future for the Group can be secured.”
